NAFTA AND U.S. CORN SUBSIDIES: EXPLAINING THE DISPLACEMENT OF MEXICO’S CORN FARMERSThis paper intends to explicate the causal relationship between U.S. federal subsidies for domestically produced corn and the post-NAFTA rural to urban migration in Mexico. While corn production has been central to the Mexican economy for centuries, it cannot economically compete with highly subsidized corn produced in the United States. In 1994 the implementation of the North American Free Trade Agreement (NAFTA) liberalized the markets of Canada, the United States, and Mexico, effectively eliminating nearly all trade barriers. Consequently, corn produced in Mexico now competes directly with American corn in North American markets. Competition with artificially distorted U.S. corn prices has driven unsubsidized corn produced in Mexico out of its customary domestic market as Mexican consumers began to purchase American corn. Mexican corn farmers were no longer able to make a sustainable living due the plummeting demand for their produce and accordingly migrated from rural farms to urban centers in search of employment. Therefore, American corn subsidies are primarily responsible for the rural to urban population shift in Mexico that manifested following the NAFTA deal in 1994.
Columbus Townhall > Forum > Politics > National > Economy, Budget and Fiscal Issues (Moderators: Peter, CTH Public Relations)
Topic: Unintended Consequences
